BRICS Countries Highlight Peril of Currency in Climate Finance Strategy Summary
In the global push towards a more sustainable future, financial institutions are taking significant strides to integrate environmental considerations into their operations. Two such countries leading the charge are Latvia and Uruguay.
Latvia's central bank, Latvijas Banka, has made a commendable effort to strengthen its sustainability initiatives. The bank has integrated sustainability across its non-monetary policy portfolios, and its 2025 climate-related disclosures report aligns with the Eurosystem's unified disclosure framework and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
The bank's efforts have shown promising results. Its developed markets equity portfolio has achieved a 73% reduction in carbon footprint since 2022. Moreover, the bank's emerging markets fixed income portfolio has seen an 11% improvement in its ESG score after a benchmark shift favouring stronger ESG issuers.
Latvia's focus on sustainability is not limited to its own operations. The country's 2025 climate-related disclosures report also reveals a 46% reduction in greenhouse gas emissions intensity per GDP unit compared to 1990. However, there has been a 1.3% rise in absolute GHG emissions in 2023, mainly due to increased nitrous oxide emissions tied to synthetic nitrogen fertiliser use in agriculture.
Across the Atlantic, Uruguay is making waves with its sustainability-linked initiatives. The country's US$2.2bn sovereign sustainability-linked bond (SSLB) is a step-up/step-down coupon structure tied to environmental performance. Uruguay's third annual SSLB report shows the country is 4 percentage points short of the 50% target needed to avoid a coupon step-up.
Elsewhere, the Accounting Standards Board (ASB) Nepal is consulting on the development of Nepal Sustainability Reporting Standards (NSRS), aligned with IFRS S1 and S2. Meanwhile, the Department for Business and Trade has released exposure drafts for the inaugural UK Sustainability Reporting Standards.
The New Development Bank (NDB), composed of the five BRICS founding members, is also actively involved in sustainability efforts. The bank, which holds equal voting rights and capital shares among its members (Brazil, Russia, India, China, and South Africa), continues to support sustainable development projects around the world.
These initiatives underscore a global shift towards a more sustainable financial landscape. As more countries and institutions adopt these practices, we can expect to see a more environmentally conscious future in the financial sector.
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